Friday, March 11th
* Thursday's ECB coming together brought stock buying together with euro selling--and together with therefore a sudden reversal of both during the twenty-four hr flow earlier a rally belatedly inwards the twenty-four hr flow together with overnight brought us dorsum toward the highs. As the one-hour oscillator of upticks/downticks for all listed stocks shows below, the selling was quite wide during yesterday's selloff together with the buying has been wide on the reversal. New highs vs. lows for listed stocks deteriorated yesterday, therefore I volition endure watching breadth going forrad to view if participation expands or contracts on upside moves.
* We've turned downward on the cumulative publish of purchase vs. sell signals given past times the Wilder Parabolic-SAR system. That tracks all NYSE shares on an end-of-day dry reason (raw information from Stock Charts). Note that, during vigorous upward wheel phases, such every bit nosotros had inwards Oct of final year, the cumulative SAR stair out volition peak ahead of price. So far, during the deterioration inwards the measure, toll has held upwardly well. I thin toward buying weakness that remains higher upwardly yesterday's lows.
* I noticed some underperformance of minor cap shares yesterday. One twenty-four hr flow does non brand a trend, only during the vigorous ascent from the Feb lows, minor caps were outperformers. I volition endure watching that relative performance going forward, every bit it could offering clues every bit to the eventual turning of the cycle.
Thursday, March 10th
* Midweek saw rangebound markets, every bit selling greeted early on strength, only stocks past times together with large held against their prior day's lows. We closed amongst nether 50% of SPX stocks nether their three together with 5-day moving averages. Going into the ECB announcement, nosotros quest to view the lows of the final 2 days concord upwardly inwards lodge to maintain the vigorous uptrend from the Feb lows.
* Here is a nautical chart of the publish of NYSE stocks giving purchase signals versus sell signals amongst observe to their Bollinger Bands--a really useful stair out of wide marketplace forcefulness vs. weakness. Note the upthrust from the Feb lows, followed past times a pullback inwards purchase signals, only non at a betoken where we're getting internet sell signals. It is mutual for thrusts higher inwards the Bollinger stair out to endure followed past times farther toll strength; marketplace rises conk vulnerable when nosotros laid about seeing internet sell signals. Note how thrusts lower inwards the stair out convey represented practiced buying opportunities every bit a whole.
* I late wrote on the theme of a powerful stair out of stock marketplace sentiment. Interestingly, that stair out shows a internet reduction of SPY shares outstanding over the past times 5, 10, together with 20 trading sessions. That configuration has tended to Pb to toll gains over the side past times side 5-20 trading sessions.
Wednesday, March 9th
* Monday's post talked most a normal correction from stretched levels together with nosotros got that yesterday, every bit most 19% of SPX stocks closed higher upwardly their 3-day moving averages together with 26% higher upwardly their 5-day averages. In an uptrend, nosotros await short-term oversold levels to tumble out at successively higher toll lows. We're seeing a bounce inwards overnight merchandise together with my base of operations instance is that yesterday's lows concord every bit nosotros ready a examine of the recent highs. Of course, marketplace reply to tomorrow's ECB proclamation could convey a lot to do amongst whether that base of operations instance plays out or not.
* Yesterday, stocks across all exchanges making fresh monthly highs dropped from 1720 to 719; novel lows rose from fourscore to 88. In general, I exclusively conk concerned most the reversals of wheel uptrends when novel lows expand meaningfully. The past times calendar week we've had the lowest publish of novel monthly lows inwards years. The absence of weakness ends upwardly beingness every bit rigid a predictor every bit the presence of strength. Markets mostly plough because i or to a greater extent than sectors are rolling over, creating the expansion of novel lows.
* Here's a aspect at the performance of major stock marketplace sectors from the Finviz site. Note how the sectors that led performance on the downside (utilities) are instantly lagging together with how those most wound inwards the downturn (raw materials) are instantly leading performers. If the uptrend is to continue, nosotros would desire to view wide participation of the sectors; a rally amongst rigid sector rotation is what oft leads to a to a greater extent than prolonged correction.
Tuesday, March 8th
* After a sizable run higher, we're get-go to view signs of distribution. While the publish of stocks across all exchanges hitting fresh monthly highs was impressive yesterday (1720), that publish was below the levels seen the prior twenty-four hr flow (2082) together with the twenty-four hr flow earlier that (1868). Small cap together with midcap stocks maintain to outperform. NASDAQ shares convey been relatively weak; commodity-related shares convey been relatively strong. Consumer staples shares (XLP) striking a novel high yesterday, business office of a theme that I believe volition emerge inwards this the world of growing negative involvement rates: the appeal of stable, high lineament stocks that offering relatively rubber together with attractive yields. Such stocks are richly valued already, only could view bubble-like performance should key banks maintain downward the negative charge per unit of measurement path.
* Commodities convey staged a important rally; DBC is instantly higher upwardly its Dec 31st unopen (see below). The the US dollar (UUP) is downward on the year. With ECB coming upwardly on Thursday, powerfulness nosotros endure pricing inwards important reflation, together with powerfulness the key banks inwards Nippon together with Europe endure embarking on stimulus measures higher upwardly together with beyond negative involvement rates together with bond-buying? That would endure a most important macro development.
* The recent selling to a greater extent than or less the 2000 grade inwards ES notwithstanding, I maintain to endure impressed past times the vigor of the rally off the Feb lows. Note below how we've gone from an overbought province of affairs to an fifty-fifty to a greater extent than overbought one, amongst stocks moving steadily higher. (Chart tracks SPX stocks making novel highs versus lows over 5, 20, together with 100-day lookback periods). If indeed we're getting reflation from key banks, the implications for stocks would non endure short-term together with could maintain to powerfulness shares higher.
Monday, March 7th
* If our trading does non supply these 4 psychological benefits, we're apt to underperform together with lose our powerfulness to perform inwards the zone. We tin dismiss best handle our positions if we're managing ourselves well.
* We saw some wide selling belatedly on Fri together with therefore far convey non been able to bounce inwards overnight trading. Fri closed amongst over 80% of SPX stocks closing higher upwardly their 5, 10, 20, together with 50-day moving averages, only a waning pct closing higher upwardly their 3-day averages. (Data from Index Indicators). I would non endure surprised to view a normal correction of the recent strength; that should terminate higher upwardly the belatedly Feb lows to sustain the electrical current uptrend. I would likewise non endure surprised to view subdued risk-taking ahead of this week's ECB meeting.
* The intermediate-term wheel measures that I rail maintain to endure stretched to the upside. Note how we've rallied inwards the human face upwardly of an "overbought" cycle. That momentum suggests that we're non however at a betoken where nosotros would await the uptrend to meaningfully reverse.
* One stair out I rail is the volatility of marketplace breadth. Specifically, I rail the volatility of the daily readings of SPX 500 stocks making fresh novel highs together with lows on a 5, 20, together with 100-day basis. We late striking a meaningfully depression grade inwards that measure. Since 2010, when we've been inwards the lowest quartile of readings for breadth volatility (as at present), the side past times side 5 days inwards SPX convey averaged a gain of exclusively .01%. When we've been inwards the highest quartile, the side past times side 5 days inwards SPX convey averaged a gain of +.44%. It's i to a greater extent than stair out that makes me opened upwardly to the possibility of some short-term correction of the recent marketplace strength.
* Thursday's ECB coming together brought stock buying together with euro selling--and together with therefore a sudden reversal of both during the twenty-four hr flow earlier a rally belatedly inwards the twenty-four hr flow together with overnight brought us dorsum toward the highs. As the one-hour oscillator of upticks/downticks for all listed stocks shows below, the selling was quite wide during yesterday's selloff together with the buying has been wide on the reversal. New highs vs. lows for listed stocks deteriorated yesterday, therefore I volition endure watching breadth going forrad to view if participation expands or contracts on upside moves.
* I noticed some underperformance of minor cap shares yesterday. One twenty-four hr flow does non brand a trend, only during the vigorous ascent from the Feb lows, minor caps were outperformers. I volition endure watching that relative performance going forward, every bit it could offering clues every bit to the eventual turning of the cycle.
Thursday, March 10th
* Midweek saw rangebound markets, every bit selling greeted early on strength, only stocks past times together with large held against their prior day's lows. We closed amongst nether 50% of SPX stocks nether their three together with 5-day moving averages. Going into the ECB announcement, nosotros quest to view the lows of the final 2 days concord upwardly inwards lodge to maintain the vigorous uptrend from the Feb lows.
* Here is a nautical chart of the publish of NYSE stocks giving purchase signals versus sell signals amongst observe to their Bollinger Bands--a really useful stair out of wide marketplace forcefulness vs. weakness. Note the upthrust from the Feb lows, followed past times a pullback inwards purchase signals, only non at a betoken where we're getting internet sell signals. It is mutual for thrusts higher inwards the Bollinger stair out to endure followed past times farther toll strength; marketplace rises conk vulnerable when nosotros laid about seeing internet sell signals. Note how thrusts lower inwards the stair out convey represented practiced buying opportunities every bit a whole.
* I late wrote on the theme of a powerful stair out of stock marketplace sentiment. Interestingly, that stair out shows a internet reduction of SPY shares outstanding over the past times 5, 10, together with 20 trading sessions. That configuration has tended to Pb to toll gains over the side past times side 5-20 trading sessions.
Wednesday, March 9th
* Monday's post talked most a normal correction from stretched levels together with nosotros got that yesterday, every bit most 19% of SPX stocks closed higher upwardly their 3-day moving averages together with 26% higher upwardly their 5-day averages. In an uptrend, nosotros await short-term oversold levels to tumble out at successively higher toll lows. We're seeing a bounce inwards overnight merchandise together with my base of operations instance is that yesterday's lows concord every bit nosotros ready a examine of the recent highs. Of course, marketplace reply to tomorrow's ECB proclamation could convey a lot to do amongst whether that base of operations instance plays out or not.
* Yesterday, stocks across all exchanges making fresh monthly highs dropped from 1720 to 719; novel lows rose from fourscore to 88. In general, I exclusively conk concerned most the reversals of wheel uptrends when novel lows expand meaningfully. The past times calendar week we've had the lowest publish of novel monthly lows inwards years. The absence of weakness ends upwardly beingness every bit rigid a predictor every bit the presence of strength. Markets mostly plough because i or to a greater extent than sectors are rolling over, creating the expansion of novel lows.
* Here's a aspect at the performance of major stock marketplace sectors from the Finviz site. Note how the sectors that led performance on the downside (utilities) are instantly lagging together with how those most wound inwards the downturn (raw materials) are instantly leading performers. If the uptrend is to continue, nosotros would desire to view wide participation of the sectors; a rally amongst rigid sector rotation is what oft leads to a to a greater extent than prolonged correction.
Tuesday, March 8th
* After a sizable run higher, we're get-go to view signs of distribution. While the publish of stocks across all exchanges hitting fresh monthly highs was impressive yesterday (1720), that publish was below the levels seen the prior twenty-four hr flow (2082) together with the twenty-four hr flow earlier that (1868). Small cap together with midcap stocks maintain to outperform. NASDAQ shares convey been relatively weak; commodity-related shares convey been relatively strong. Consumer staples shares (XLP) striking a novel high yesterday, business office of a theme that I believe volition emerge inwards this the world of growing negative involvement rates: the appeal of stable, high lineament stocks that offering relatively rubber together with attractive yields. Such stocks are richly valued already, only could view bubble-like performance should key banks maintain downward the negative charge per unit of measurement path.
* Commodities convey staged a important rally; DBC is instantly higher upwardly its Dec 31st unopen (see below). The the US dollar (UUP) is downward on the year. With ECB coming upwardly on Thursday, powerfulness nosotros endure pricing inwards important reflation, together with powerfulness the key banks inwards Nippon together with Europe endure embarking on stimulus measures higher upwardly together with beyond negative involvement rates together with bond-buying? That would endure a most important macro development.
* The recent selling to a greater extent than or less the 2000 grade inwards ES notwithstanding, I maintain to endure impressed past times the vigor of the rally off the Feb lows. Note below how we've gone from an overbought province of affairs to an fifty-fifty to a greater extent than overbought one, amongst stocks moving steadily higher. (Chart tracks SPX stocks making novel highs versus lows over 5, 20, together with 100-day lookback periods). If indeed we're getting reflation from key banks, the implications for stocks would non endure short-term together with could maintain to powerfulness shares higher.
Monday, March 7th
* If our trading does non supply these 4 psychological benefits, we're apt to underperform together with lose our powerfulness to perform inwards the zone. We tin dismiss best handle our positions if we're managing ourselves well.
* We saw some wide selling belatedly on Fri together with therefore far convey non been able to bounce inwards overnight trading. Fri closed amongst over 80% of SPX stocks closing higher upwardly their 5, 10, 20, together with 50-day moving averages, only a waning pct closing higher upwardly their 3-day averages. (Data from Index Indicators). I would non endure surprised to view a normal correction of the recent strength; that should terminate higher upwardly the belatedly Feb lows to sustain the electrical current uptrend. I would likewise non endure surprised to view subdued risk-taking ahead of this week's ECB meeting.
* The intermediate-term wheel measures that I rail maintain to endure stretched to the upside. Note how we've rallied inwards the human face upwardly of an "overbought" cycle. That momentum suggests that we're non however at a betoken where nosotros would await the uptrend to meaningfully reverse.
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